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Bush Proposes to Give States More Control Over Medicaid

The Bush administration has unveiled a sweeping new proposal to give states relief from their soaring Medicaid expenditures, but critics charge the plan gives the states permission to cut benefits even for the nation's neediest citizens, including the low-income elderly.

The new Bush proposal would not affect services for the 28 million people who are so poor that federal law requires they be covered by the program. But the proposal could transform or eliminate care for about 15 million additional low-income people--many of them children and elderly people in nursing homes--whom states have also chosen to include in their Medicaid programs.

For this group, the Bush administration is proposing eliminating federal rules that currently govern their care and instead give the states a pot of money that they can use as they wish, without any federal oversight. The states could use the money to place new restrictions on benefits, shift more people into managed care, charge more for services and give some coverage to people who are currently uninsured. States could also do away with additional benefits they have chosen to include under Medicaid, such as prescription drug coverage, dental and vision care and some services for the elderly.

"We want states to focus on acute and long-term care," Thompson said at a news conference. "Instead of putting people into nursing homes, they might give them vouchers or cash to stay in his or her own home. We think that would save a lot of money."

States could opt to accept the Bush administration's offer or continue under the old system. But the administration is sweetening the pot with $12.7 billion in extra temporary assistance over seven years.

States would be taking a risk because the proposal also would give them a fixed amount of federal money for the beneficiaries that states voluntarily choose to cover, a shift away from the current system, under which the federal government matches every dollar that states spend. States could no longer increase their federal Medicaid payment by increasing their own spending.

The Medicaid changes would require the approval of Congress. Democrats and leading consumer advocacy groups accused the administration of trying to create a block grant that would abandon the program''s central guarantee of health care to the poor. A proposal to convert Medicaid into a system of block grants was put forward as part of the conservative "revolution" of then-House Speaker Newt Gingrich. It passed Congress in 1995 but was vetoed by President Bill Clinton.

"In effect, the Bush administration is giving a green light to slash health care for the people who need it the most," said Ron Pollack, executive director of Families USA, a national patient advocacy group. "Such a change could result in needy families losing health coverage and being placed on waiting lists, key benefits being eliminated from coverage, and families being forced to pay premiums, deductibles and copayments that are unaffordable."

Representative John D. Dingell (D-Mich.) said states needed more federal money, not more flexibility to cut benefits.